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Thinking on marketing, technology, digital commerce and more from Tony Long

Amazon’s Next Acquisition

How do you become an even more complete solution than Amazon currently is?

If you’re from the tech world, AWS is a well-known acronym. It stands for Amazon Web Services, and yes it’s “that” Amazon but no, it’s not a consumer-focused business.

AWS was fairly quietly launched in 2002 as a way for the e-commerce upstart to monetize the systems that it needed to create for itself to support its own business. Put differently, in the early 2000’s Amazon forecasted its own need for web delivery capabilities that were either beyond what a third party could deliver, or were too mission-critical for entrusting to a third party. I wasn’t in the room when the conversations and decisions happened so I can only speculate, but my bet is that the rationale was based on a combination of both.

By 2006 AWS relaunched as a stand-alone business. As a purely cloud-based service, it wasn’t an appropriate environment for many application architectures but it was great for some. On top of this, it could be easily stood up and laterally expanded. This meant that web developers could almost instantly leverage a web delivery environment that could be as small as needed or expand almost infinitely. Without the need to dedicate specific hardware to the need, developers and IT departments had a new resource that was truly cost-effective (only pay for what you use) and truly agile (reconfigure practically instantly, as needed).

Why are we discussing AWS? Because it embodies how Amazon views the world, and how companies that lack any kind of vision for the future – like Accenture – are. And, no, the punch line is not that Accenture is Amazon’s next acquisition.

Amazon now has more than 100,000 robots in action around the world, and it has plans to add many more to the mix.

Business in general increasingly faces challenges brought on by changing behaviors brought on by instant availability of everything through smartphones. This is a phenomenon I have discussed at great length in blog posts and keynote addresses around the world, in case you want to go deeper.

The key is this: Amazon doesn’t necessarily take the easy way when it addresses business challenges. It plays out the scenario to the edge of the horizon and builds for that. Amazon will take its financial lumps in the near term for the longer-term benefit. Accenture, by contrast, seems to have a very short-term interest in how things will be. But don’t take my word for it: if Accenture’s leadership had any vision for the future, they would not have spent money acquiring creative agencies, because creative agencies do not create value and do not have inherent value. Ad agencies have maneuvered themselves out of the business value chain by focusing on the wrong things: scale over individuality, occasional home runs over reliable base hits, dictation over conversation.

In the world of data-driven everything, investing in a sign painter seems more about filling in today’s gap than building for the future. That’s exactly what Accenture has done.

The cause celebre in my professional world has been Amazon’s acquisition of Whole Foods. Everybody agrees that this was not because kale is an awesome business proposition. It’s to make Amazon a more complete solution for consumers. The rumors about Amazon buying Target were just itchy trigger finger responses from bored analysts, IMO.

So, what would make Amazon an even more complete solution than they already are? Salesforce.com.

Salesforce is a publicly traded cloud computing and software company that has evolved its service offering from providing companies with an interface for case management and task management to a complete marketing capabilities suite. Their USD$78b market capitalization (as of January 2018) compares, shall we say, quite favorably, to Amazon’s market cap: nearly USD$600b, which is over 7X that of Salesforce.

Meaty, But Nothing To Choke On
Salesforce should be Amazon’s next acquisition, because it gives Amazon the tools and expertise they need to fully own the consumer experience. They have the online and offline presence to be there, they have the tech infrastructure to grow infinitely, and then they would have the tools they need to anticipate their customers’ needs, and deliver on them both online and offline. It puts them squarely in the business of serving people (Amazon.com), of serving businesses (AWS), and of serving the businesses that serve people (Salesforce.com), all the while scooping up consumer, retail, media, and CRM data by the petabyte.